Default Action – Res Judicata

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7^th Circuit Court of Appeals

Case Name: Patrick J. Doherty v. Federal Deposit Insurance Corporation, et al.

Case No.: 18-3133

Officials: FLAUM, KANNE, and SCUDDER, Circuit Judges.

Focus: Default Action – Res Judicata

Washington Federal Bank brought a default action against Patrick Doherty, John Farano, Jr., and Worth Conversion, LLC, for notes related to various real estate ventures. Doherty raised affirmative defenses on behalf of himself and Worth, but the bank dismissed Doherty and Worth from the action, without prejudice, after obtaining a default judgment against Farano. Doherty then attempted to bring this suit against the bank with claims founded on similar grounds as his previously-raised affirmative defenses. But the Cook County Circuit Court determined that Doherty’s claims were barred by res judicata thanks to the default judgment entered against Farano. Doherty appealed to the Illinois Appellate Court, but before his appeal was heard, Washington Federal was placed into the Federal Deposit Insurance Corporation’s receivership. The FDIC removed this action to the district court, which adopted the Illinois Circuit Court’s decision. Because res judicata does not bar Doherty’s claims, we vacate and remand for further proceedings.

Vacated and remanded

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.